Iran Signs Daily Export Contract of 100,000 Barrels of Oil to Russia

Bijan Namdar Zangeneh, Iran's Minister of Oil, announced after a meeting with Alexander Novak, the Russian Minister of Energy, on Tuesday, March 3, that "within the next two weeks, we will sign an agreement to export 100,000 barrels of crude oil to Russia daily." According to Shana, the press agency of the Iranian Ministry of Oil, based on this agreement, Iranian crude oil will be delivered to Russia and exported to destinations specified by this country. The Russian news agency TASS also reported that Iranian oil shipments will be sold to Lukoil. This Russian company has already purchased several single oil shipments for use in its refineries in Eastern European countries, but with the signing of the contract, the sale of Iranian oil will be long-term and continuous. The Minister of Oil also stated that "fifty percent of the value of the mentioned export shipments will be paid in cash to Iran at specified times, and the remainder will be used to finance imports of Russian goods needed by Iran." He emphasized that this contract is not a barter (goods-for-goods transaction), but rather that some of the goods we need will be imported from Russia in exchange for oil sales. Iran had agreed to sell 500,000 barrels of oil daily to Russia since 2015, even before the lifting of sanctions, but there were disagreements over the details of this agreement and the method of payment for Iran's oil. In some cases, officials from both sides had stated that this transaction does not constitute a sale of oil, but rather an oil swap, whereby Iran receives Russian oil at the Neka oil terminal in the Caspian Sea and delivers an equivalent amount of its own oil in the Persian Gulf to Russian customers. Regarding the repayment of half the value of Iran's crude oil exports to Russia through imports of goods, Russian companies are likely to settle their debts by exporting oil industry equipment to Iran. So far, Russian companies, including Lukoil, have signed seven memorandums for the development of Iran's oil fields. Iran plans to invest $100 billion in 49 of its oil and gas fields over the next five years through tenders based on a new oil contract model known as "IPC" and hopes to attract 80% of this amount from foreign companies. Meanwhile, Eshaq Jahangiri, Iran's First Vice President, also assessed the relations between the two countries as growing during a meeting with Igor Shuvalov, the First Deputy Prime Minister of Russia, and stated that "we are interested in implementing the agreements signed between the two countries in the oil and energy sector."